GIPF asset value nearing N$100 billion mark

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Edgar Brandt
Windhoek

As at end of March 2017 the Government Institutions Pension Fund’s (GIPF) total asset value stood at N$99.5 billion and is expected to announce within the coming months that it has reached the symbolic and lucrative N$100 billion mark.

Also at the end of March 2017, the Fund had recorded an annual return of 5.84 percent against the benchmark of 4.59 percent while the total membership of GIPF stood at close to 136 000, of which over 100 000 are active members and over 35 000 are active annuitants, meaning they are receiving a monthly pension.

The total benefit paid paid out by the Fund since April last year to March 2017 was N$3.2 billion. During the month of March 2017 alone, the Fund processed over 600 claims valued at close to N$300 million.

These figures were revealed yesterday during the GIPF’s fifth Annual Stakeholders Consultative Meeting, which took place under the theme “Collaboration-the winning formula”, which CEO, David Nuyoma, says is linked to the Fund’s efforts of enhancing service delivery to all its stakeholders.

“I trust that these facts give you a slight idea of just how impactful the existence of this Fund is and how many people nationwide are affected by its operation. As a result there is no room for errors or delays in processing the above benefits or in our interactions with our members as thousands of households stand to be affected,’’ said Nuyoma.

Also present at the stakeholder engagement was Goms Menette, the Chairman of the GIPF Board of Trustees, who noted that he is aware that the Fund’s asset growth and its contribution to the development of the economy is constantly being watched with keen interest. “As Trustees we have a duty to ‘Guard, and To Grow’ this Fund. I must admit that this task has not been easy in recent years, given the volatile market performance experienced globally. No Fund has been spared, however I am glad to report that the investment strategy we have applied has ensured that our members funds have not suffered the negative global impact tremendously. As such the Fund continues to be in a sound financial position with assets exceeding liabilities even after adjustments are made for actuarial reserves,” said Menette.

Menette noted that the N$ 2 billion the Fund committed to a second round of fund managers with unlisted mandates in the areas of venture capital, debt funds, infrastructure funds and general private equity, the Fund awarded a total of eight new private equity mandates destined for local investment. “During the same engagement we also shared with you the establishment of an internal Treasury unit in the Fund, aimed at directly managing a portion of our assets in-house. I am proud to announce that great progress has been realised and at the end of April 2017, a total of N$10 billion was managed by this unit. Of this amount, in excess of N$8 billion was invested in Government Bonds,” Menette explained. He added that a further N$5.9 billion in assets were swapped with the Bank of Namibia to support the country’s international reserves.

“Furthermore, our commitment to assuming 30 percent of the deliverables of the Social Progression Pillar, as it relates to Land Delivery, Housing and Sanitation under the Harambee Prosperity Plan (HPP) is still well underway and tied to our three-pronged strategy of addressing the housing challenge in Namibia, which is addressed through land servicing, construction of units and housing financing.

GIPF’s first approach in addressing the housing challenge is through the provision of housing loans managed by First Capital Real Estate Finance Fund, which is a Trust Fund that was established by GIPF through its Unlisted Investment Portfolio. First Capital is tasked to handle the management and administration of amongst others, the housing scheme which received an allocation of N$1 billion from the Fund. With this amount First Capital assisted close to 2000 members by providing finance to acquire houses and they are able to accommodate around 25 to 30 members on a monthly basis as they collect repayments from the existing book for new loans, depending on the amount to be financed. GIPF says it is reviewing the progress made through this intervention with a view on how to deal with the matter in the long run.

Secondly, the Fund serviced 2 142 plots across the country, which included plots for houses, townhouses and flats targeting low to middle-income households. “Our focus since June 2016 is on affordable housing for which we have availed an additional N$300 million for the purposes of land servicing. To date we have serviced 391 stands at a selling price of N$120 000,” said Menette.

Thirdly, GIPF has facilitated the construction of 735 general and single residential housing units across the country and recently approved the servicing of 327 single residential plots and the construction of an additional 180 housing units in the affordable housing segment.

“As Namibia’s largest pension fund, boasting a significant membership base, we believe that stakeholders have a genuine expectation from GIPF to bring its side in tackling this national challenge. However this remains an insurmountable task because we have realised that the demand far exceeds the supply and we are faced with challenges such as securing land. Access to land is critical in trying to address this need, and the Fund engaged key stakeholders such as the Ministry of Rural and Urban Development, in an effort to acquire land at market rates to enable us to allocate land for the servicing of plots and construction of affordable housing stock,” Menette stated.

He continued that GIPF’s targets will be better achieved if it could buy land wholesale, service plots, sell these as ‘plot and plan’ to civil servants and then invite developers whose modus operandi is aligned to the Fund’s objectives.

“Another major challenge relates to debt consolidation where property development efforts are at risk of non-completion when pre-sales fail to materialise. Pre-sales are based on clients’ pre-approval and not on bank guarantees. Consequently in an event that a potential client is indebted, securing mortgage funding will prove difficult. It is therefore our intention to include financial literacy in our member education programme to accelerate access to funding. Addressing these constraints will complement our efforts greatly in mitigating the risk of housing delivery,” Menette concluded.

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